The upcoming Asia-Pacific
Economic Cooperation (Apec) summit in Beijing has led to a divergence in the
demand outlook for seaborne metallurgical coal.
The Chinese government has
imposed output restrictions on steel mills and coke producers in the capital
and its surrounding areas ahead of the talks scheduled for November 5-11 in a
bid to cut air pollution.
While some expect the
restrictions to have some impact on demand for seaborne met coal, others are not
anticipating any change.
"The impact will just
be for the short term. Also, Chinese domestic met coal production in the north
could see some decline as well so I don't expect to see much differences in
prices," a trading source said on Tuesday October 28.
A mill source said that
the government has issued instructions to steelmakers to slow down the rate of
their coke production. The mill has yet to comply, he said.
State-owned mill will have
no choice but to adhere to these instructions however, the source said, and
this could have some effect on demand for seaborne coking coal.
Pricing remains the
dominant factor that affects his purchasing plans. "I have enough stock
now so I'm not in a rush to make any purchases, but if prices are okay, I will
still buy," he said.
CFR Jingtang
premium hard coking coal index was calcuated at $121.12 per tonne on Tuesday,
down $0.06 from Monday. The CFR Jingtang hard coking coal index also fell $0.87
to $110.19 per tonne.
The fob Australia indices
were unchanged at $111.86 per tonne for premium hard coking coal and $100.28
per tonne for hard coking coal.
Separately, data released
by China Iron & Steel Assn (Cisa) on Tuesday showed that its member mills
produced an average of 1.7629 million tpd of crude steel during the second ten
days of October, down 2.25% from the preceding period.
Cisa members are mainly
medium-sized and large steelmakers and account for around 80% of the country's
total steel output.
On the Dalian Commodity
Exchange, the most-traded January coking coal contract closed at 774 yuan
($126) per tonne on Tuesday, up slightly from Monday's close of 773 yuan ($126)
per tonne. The most-traded January coke contract closed lower at 1,087 yuan
($177) per tonne, compared with the previous day's close of 1,096 yuan ($179)
per tonne.
The yuan prices are the
equivalent of cfr prices plus 17% VAT and port charges of about 35 yuan ($6)
per tonne.
